Tuesday, August 02, 2005

"Style"



Different people have different styles. Comfort can be a personal preference. Risks are seen differently from different points of view.

In Trading one main difference in style is how often a trader trades. Some traders trade 100 times a day and are quite comfortable with their style of trading. Others trade twice a day and this suits them. Then there are swing traders who may open and close a position over a period of days or weeks. And of course investors.

Here is a chart showing intraday price swings:

A different style of trading might see only 2 trades or even 1 trade worthwhile for that style. A purely scalping mode of trading might involve even more round trips in a day.
Looking at how much gain is available on this chart, compared with what an investor who was long may have made gives a trader an idea of how much his risk/reward may have been changed ... if he can take advantage of the style of intraday trading.

I have seen "traders" who intended to trade according to market turns, but who then changed their style mid trade when it was moving against them. This actually leaves them without a style, they are trading on hope or gambling.

Discipline involves trading with a consistent style. You don't have to get married to a trade, but you should be consistent with your style that you have developed.